Soybean market sees positive movement
21.02.2023 (Ag Update) - Soybean prices have seen some positive movement recently due in large part to weather conditions impacting the South American soybean crop.
“We’ve had some good market movement on the soybean side, (and) we’ve actually broken through $15.50. Today, we’ve pulled back a little bit, but that seems to be a good point of resistance and we took out January highs, too,” said Allison Thompson, the new president of The Money Farm, in Ada, Minn., on Feb. 13. Thompson recently purchased the business from former president Luke Swenson.
“But I think we’re going to need to see some follow through with some fresh news,” she continued. “Unfortunately, right now we just don’t have a whole lot of it. We know that South America has been having some issues, but, there too, we’ll see what the weather takes on this week. We’ll probably see some volatility as they’re in the middle of their harvest right now.”
Thompson explained that a lot of the strength in the soybean market is actually coming from soy meal. There, too, the U.S. has set some new record highs.
“We made some new record highs yesterday (Feb. 12), and we’re making some highs again today, so that’s really been the support of the soybean market,” she said.
A lot of that has to do with Argentina’s soybean production being lower this year due to very dry conditions during the growing season there, and what that’s going to mean for their crush numbers. And, with Argentina being the world’s top exporter of soy meal and oil, the lower production definitely brings on some concern for the market.
“But with meal prices being strong, it wouldn’t be surprising to see Argentina start to import some beans from Brazil to make up that difference and keep them alive on the market,” she said. “It’ll definitely be something worth watching, especially since that market is becoming over-bought. Some type of correction wouldn’t be surprising, but again, we’ve seen these markets and a run-away bull market stay up here for quite some time.”
Soybean harvest is taking place in South America now in Brazil and it’s been a slower pace because of recent rains, the same rains that are affecting the planting of their second, or safrinha, corn crop.
“The rains have hindered it not being up to last year’s pace, but again, if they start getting some good weather, it should turn around,” she said. “Unfortunately, the near-term forecast looks like they still might be getting some rain this week (Feb. 13-17), so it’s just pulling it back a little longer than what they were anticipating, (and) we’re seeing that give some support to the market, too, on just how much of those beans get to the ports on time. Things like that are also affecting their transportation to those ports, as well, so it’s definitely something to keep an eye on.”
Demand for U.S. beans had been good, but we’re reaching that point where the world typically turns to South American sources for product. Thompson noted there were recent rumors that China possibly bought some cargoes of U.S. soybeans set for spring delivery, but the sale hadn’t been verified as of the morning of Feb. 13.
“We were really hoping we’d see some confirmation this morning and we didn't get it in order to push this through. Now we really need some fresh demand news,” she said, adding that getting that confirmation would have provided additional trading support.
“We didn’t get it this morning, (but) we’re still staying up pretty high thanks to those outside markets. However, we’re going to need some demand here in the market pretty soon or, again, it might be hard to overcome any of these business levels,” she added.
Looking ahead to spring planting, Thompson feels that most producers are sticking with their usual levels of corn and soybeans for the most part.
“It’d be nice to see new crop soybeans come up a little bit more than what they have. They’re still trading around $13.80, so it’s not a bad time to start adding some sales, but I think $14 will get a lot more guys excited,” she said.
Looking at area prices, at one local elevator in west central Minnesota regularly followed in this column, as of Feb. 13, the February cash price for soybeans was $14.84 and basis was 520 cents under. The September 2023 futures price was listed at $13.85 and basis was +6 cents over.